Mark Lacter, 59

This morning L.A. Observed disclosed the death of its business editor and writer, Mark Lacter. LAO editor-in-chief Kevin Roderick reported that Lacter’s “wife, the author Laura Levine, told me that Mark suffered a stroke yesterday and could not survive the bleeding on his brain. He was 59 and died at Ronald Reagan UCLA Medical Center.”

A former Los Angeles Business Journal editor, Lacter was a regular commentator on radio station KPCC and also published in Los Angeles magazine. In 2005, he was named by the Society of Professional Journalists as Distinguished Journalist of the Year

Although Lacter would often infuriate Frying Pan News readers with his swipes at unions, he also railed against developers who were manipulating the government’s EB-5 visa program and, more notably, against the outlandish inequality between Los Angeles’ haves and have-nots. To the end Lacter believed in an economic system that allowed those workers on its lowest rungs to climb up to the middle class.

“We’re not just talking about an opportunity to be a dishwasher,” he told KPPC’s Steve Julian. “We’re talking about the chance to buy a house, to have your kids go to college — opportunities that only happen if the job market is a lot more robust than it is right now.”

You may like

Government Shutdown’s Silver Lining: A Corporate Hiring Guru Speaks Out

Co-published by Fast Company
Ending the shutdown won’t curtail the hiring opportunities for corporate recruiters, says one expert. It’s like divorce: Once you start thinking about leaving, the odds that it will happen go up dramatically.

In the new economic climate, even the most mission-driven of federal workers might be forgiven for abandoning the nation’s parks, airways and regulatory agencies.

When the federal government shut down for 16 days in 2013, corporate hiring guru John Sullivan advised companies on how to raid federal government workplaces for talent.

A blog post he penned at the time caused some to charge him with being unpatriotic, he said recently, while others thanked him for the reminder that federal workers were ripe for the plucking.

This time around, the climate is even better for corporations looking to cull staff from a workforce that is already well-trained and also known for its loyalty, Sullivan tells Capital & Main by phone. He describes the current moment—with hundreds of thousands of federal employees forgoing paychecks and, in many cases, sitting at home — as tantamount to “a sale on Black Friday.”

Congresswoman: The shutdown could have a long-term impact on the federal government’s ability to attract workers with IT skills.

“If you’ve been screaming for the last two years” about the skills-and-talent shortage, “this week there isn’t one,” says Sullivan, who heads the human resource management program at San Francisco State University’s College of Business.

The partial shutdown, that began on December 22 when President Trump failed to secure funding from Congress for his border wall, has impacted employees at a host of federal agencies, including the departments of Agriculture, Commerce, Homeland Security, Housing and Urban Development, Interior, Justice, State, Transportation and Treasury and the NASA.

What makes this particular shutdown so suitable for raiding federal workplaces? It’s not just that employee morale has taken a nosedive, thanks to a president who is at war with many of the agencies he oversees. Nor is it only the fact that Trump threatened to keep the government closed for as long as a year, a notion that “really scares people,” says Sullivan.

With Amazon’s opening new offices in the District of Columbia area, three out of four IT workers in DC say they would consider leaving their current jobs for the tech behemoth.

It’s also the economic climate. Companies are growing. Unemployment is low. Remote work is increasingly an option. Technical advances have made looking for a job easier than it was in 2013. “You can say ‘boo’ to your phone and apply for a job,” adds Sullivan, delivering his matchmaking pitch with such force that even the most mission-driven of federal workers might be forgiven for abandoning the nation’s parks, airways and regulatory agencies.

Congresswoman Robin Kelly (D-IL), the ranking member of the House Subcommittee on Information Technology, worried, in a statement last week, that the shutdown would have a long-term impact on the federal government’s ability to attract workers with IT skills. The federal government has generally struggled to attract young tech workers, and Amazon’s new offices in the District of Columbia area has three out of four IT workers in DC saying they would consider leaving their current jobs for the tech behemoth.

Tech workers — and upper-salaried talent — are not the only employees coveted by the private sector, says Sullivan. Forest Service employees. Coast Guard workers. Transportation and Safety Administration agents. Any unpaid workers could be lured away, especially in states like California and Texas, where economies are strong, he maintains. An employment agency for California’s casinos recently put this shout out on Twitter: “Any @TSA employees looking for new opportunities, PTGaming is hiring!” along with the popular hashtag, #shutdownstories.

The shutdown could also prompt federal employees to throw scruples to the wind and step into the infamous revolving door that leads workers from government jobs to the private sector and back again. When Sullivan was advising companies in 2013, he helped firms hire from agencies that regulated them.

“And by the way,” asks Sullivan, persisting with his siren song, “if I was a regulator, [with] President Trump eliminating all those regulations, why am I needed? Why not go to the private sector?”

Sullivan, who says he is an underpaid government worker in his own right, is concerned about the public cost of his and others’ efforts to lure away the federal government’s top talent. The best employees will leave first, and “literally billions” in training dollars will be lost, he predicts.

But he puts the blame squarely on a public sector that undervalues its workers. Corporations that pilfer federal government workforce for talent offer a kind of public service and corrective by demonstrating the price that must be paid “for degrading public service and unnecessarily frustrating federal employees,” he wrote in his 2013 post.

And one more thing.

Ending the shutdown won’t curtail the hiring opportunities for corporate recruiters, says Sullivan. “It’s like divorce. Once you start thinking about [leaving], the odds [that it will happen] go up dramatically.”

L.A. Teachers’ Potential ‘Meta-Strike’ Reveals Battle Lines in U.S. Public Education War

Co-published by the American Prospect
Superintendent Austin Beutner and his allies have made it clear they do not believe that the L.A. Unified School District in its current incarnation is worth investing in – or even preserving.

Sometimes strikes are exactly what they seem to be – battles over wages and working conditions, with relatively few implications for anything or anyone else. But sometimes a strike is about something much bigger: a fundamental clash over vision and values, with repercussions that extend far beyond the warring parties. Call it a meta-strike.

If Los Angeles teachers walk off the job January 14, as widely expected, it will be a meta-strike with extremely high stakes not only for teachers, students and parents in L.A., but for public education across the U.S. The stalemated negotiations over wages, class size, staffing and other issues matter – but they are proxies for an epic fight that has been playing out in American school districts for more than a decade.

The head of the country’s second-largest school district is aggressively advancing a controversial blueprint that could make LAUSD almost unrecognizable.

On one side of this divide are those who believe that public education as an institution should be preserved more or less in its current form, with a greater infusion of money to address chronic underfunding and understaffing. On the other side is an array of forces that want to radically restructure public schools, and who have made it clear they do not believe that the L.A. Unified School District in its current incarnation is worth investing in – or even preserving.

Austin Beutner, LAUSD’s superintendent, is nothing if not a proponent of radical restructuring. He was appointed to his post not because of his experience in education – he has never held a position in that field – but because he is a fervent advocate of an approach that has its roots in the private sector, where he spent the bulk of his career. Beutner made his considerable fortune in business, starting at the powerhouse private equity firm Blackstone and then co-founding the investment banking company Evercore Partners.

Selected by a divided school board in May, Beutner is now arguably the most powerful figure in the national movement to upend traditional public education. As head of the country’s second-largest school district, he is aggressively advancing a controversial blueprint that could make LAUSD almost unrecognizable.

Though Beutner has yet to unveil his proposal, he has tipped his hand in a big way with the hiring of consultant Cami Anderson, the former superintendent of Newark, New Jersey public schools. In Newark, Anderson pushed through a disruptive plan called the “portfolio model.” As the L.A. Times reported in November, under the portfolio model the district would be divided into 32 networks. These networks, observed reporter Bill Raden on this site, “would be overseen like a stock portfolio. A portfolio manager would keep the ‘good’ schools and dump the ‘bad’ by turning them over to a charter or shutting them down much like a bum stock. The changes in Newark included neighborhood school closures, mass firings of teachers and principals, a spike in new charters and a revolt by parents that drove out . . . Anderson.”

Why Beutner and the board majority that hired him think that the portfolio model will be more successful in L.A. than it was in Newark is uncertain. They don’t see the unchecked growth of largely unregulated charter schools as a problem, despite more and more evidence that charters discriminate against disabled students, increase racial stratification and on the whole do not perform better than traditional schools. On the contrary, they view charter expansion as elemental to the future of the district.

This is in stark contrast to United Teachers Los Angeles, the teachers union, which sees investment — in the form of higher salaries, reduced class sizes, more support staff including psychologists and nurses – and the regulation of charters and community schools as the linchpin of progress. They do not see the public school as a failed institution, but as an egregiously underfunded one whose challenges have been made significantly worse by the rise of charter schools that drain resources from traditional schools. While some influential philanthropic and community organizations have embraced Beutner’s restructuring plan, the teachers union has been somewhat successful in building community support for its vision of reinvestment, particularly for the idea of public oversight and for schools that address all the complex needs of an overwhelmingly poor student population.

While the two sides continue to negotiate, they could hardly be farther apart in how they view the future of public education. Which is why a teachers strike is almost certain.

The housing affordability crisis has happened in tandem with Wall Street’s home buying spree.

Wall Street firms drove up housing and rent prices while depressing homeownership rates after the financial crisis, according to a new study of economic data.

The analysis from researchers at the Philadelphia Federal Reserve found that after the collapse of the housing market a decade ago, institutional investors such as Blackstone, Cerberus Capital and Golden Tree seized on the opportunity to buy up homes and convert them into rental units.

In all, the researchers found that institutional investors’ purchases of residential properties represented nine percent of the overall housing price increases since the crisis — and 28 percent of the decline in homeownership rates.

“Institutional investors have helped local house price recovery but depressed local homeownership rates,” the study concluded. Such “buying and selling in the single-family housing market affected the local rental market, raising rental price growth rates.”

In mid-2018, housing prices hit their least affordable rates in a decade, according to data compiled by ATTOM Data Solutions. Meanwhile, between 2001 and 2015, America saw a 19 percent increase in the number of households that spend more than 30 percent of their income on housing, according to data from the Pew Charitable Trusts.

The housing affordability crisis has happened in tandem with Wall Street’s buying spree. Federal Reserve researchers noted that “the institutional investor-purchased share of single-family homes has been mostly flat during the early 2000s but picked up significantly since the mortgage crisis broke out in 2007.”

Corporate investors own roughly 200,000 single-family homes, according to industry data. In the last year, major Wall Street firms have continued buying up single-family homes, adding to the financial sector’s growing real estate empire.

At the same time, many of those same investment firms pumped big money into the campaign to defeat a California ballot measure that would have allowed local communities to enact rent control laws. In some cases, the resources backing the campaign came from investment firms managing public pension money.

The Fed study did offer one silver lining: It found that institutional investors’ presence in the housing market did contribute to declining unemployment rates, particularly in construction.

Congressional analysts say that for every $2 spent on tax enforcement, the government could expect to reclaim more than $5 in unpaid taxes.

The federal government could raise more than $1 trillion in new revenue by beefing up tax enforcement and by cracking down on carbon emissions, according to congressional budget analysts. Those two moves alone could help finance progressive lawmakers’ Green New Deal, or they could cover the lion’s share of the cost of the massive infrastructure investment package proposed by President Donald Trump.

The data was included in a new report by the Congressional Budget Office released Thursday.

The study found that if lawmakers reversed recent budget cuts to the Internal Revenue Service, the agency could recover tens of billions of dollars in revenue that is owed to the government — but that is not being paid. If the agency’s budget were increased by $20 billion over the next 10 years, the CBO says auditors would be able to reclaim more than $55 billion that could be used to shore up federal programs or reduce the deficit. Put another way, the analysts said that for every $2 spent on tax enforcement, the government could expect to reclaim more than $5 in unpaid taxes.

“Many taxpayers who are not compliant under the current tax system would pay the taxes they owe” if the enforcement budget is increased, the CBO said.

A recent ProPublica investigation found that as lawmakers have slashed the IRS enforcement budget in recent years, the agency has had far fewer resources with which to scrutinize the tax returns of corporations and high-income individuals. In all, the news organization estimated the IRS has not collected $95 billion in taxes that it may have otherwise collected, had Congress given it its previous level of enforcement resources.

Audits of the wealthy and corporations have steeply declined at the same time the agency has begun withholding tax refunds for recipients of the Earned Income Tax Credit. The decreased scrutiny of the wealthy and tougher posture toward the poor has occurred even though CBO notes that “the amounts collected from audits of higher-income taxpayers are, on average, much larger than collections from audits of taxpayers with lower income.”

A 2015 Inspector General report urged the IRS to focus more of its limited enforcement resources on high-income filers.

“It appears that the IRS is spending most of its audit resources on auditing tax returns with potentially lower productivity,” the report concluded.

The CBO noted that stronger enforcement would not necessarily halt tax cheating over the long haul.

“Taxpayers would gradually become aware of some of the changes in the IRS’s enforcement techniques associated with the initiatives,” the analysts wrote. “In response, they would shift to other, less detectible forms of tax evasion.”

In a separate part of the report, the CBO says a $25 per metric ton tax on carbon emissions would raise roughly $1.1 trillion over the next 10 years. That calculation factors in both the possible costs of the tax from potentially reduced economic activity and higher fossil fuel prices, as well as positive economic effects of the tax. In the first year alone, such a tax would raise $66 billion — or more than the budget of the entire U.S. Department of Education over the same time period.

“To simplify implementation, as well as to provide incentives to deploy technologies that capture emissions generated in the production of electricity, the tax could be levied on oil producers, natural gas refiners (for sales outside the electricity sector), and electricity generators,” CBO analysts wrote. “A well-designed tax that covered most energy-related emissions would be expected to reduce emissions.”

In October, ExxonMobil announced that it will spend $1 million to support an advocacy group that is pushing for a carbon tax.

Behind Kaiser’s Mental Health Breakdown

“The best practices of psychotherapy state that patients should be seen weekly or every other week,” says one clinical psychologist. But at Kaiser, his average patient must wait five weeks between appointments.

A strike by mental health professionals is impacting more than 100 Kaiser clinics and medical facilities. The union has proposed that Kaiser increase staffing and cut patient wait times.

When clinical psychologist Mickey Fitzpatrick thinks about his job, the image that comes to mind is not of a hospital or a doctor’s office, but that of a conveyor belt. Since 2015, the 45-year-old has worked at a Kaiser Permanente hospital in the Northern California city of Pleasanton, where he sees an endless stream of patients dealing with serious mental illnesses: post-traumatic stress disorder, depression, bipolar disorder and anxiety. Each week he sees four to five new patients, and estimates that last year he counseled between 800 and 900 people, who represented a blur of needs that weren’t always easy to keep straight.

“The best practices of psychotherapy state that patients should be seen weekly or every other week,” Fitzpatrick told me. But at Kaiser, he’s never been able to get anywhere near that goal. With his heavy caseload, the average patient must wait five weeks between appointments, a figure that is consistent with other Kaiser therapists I spoke to. “We’re giving them the care that we can with the resources that we can, but we’re not able to do what we’re trained to do.”

This isn’t a new problem for Kaiser. In 2013, the California Department of Managed Healthcare (DMHC) fined the nonprofit medical-care giant $4 million after completing a routine medical survey and discovering what it called “serious deficiencies in providing access to mental health services” and the company’s failure to promptly correct the problems. The survey found that patients often did not have timely access to appointments and that their educational materials “included inaccurate information that could dissuade an enrollee from pursuing medically necessary care.”

In 2015, a follow-up report by DMHC revealed that Kaiser still regularly failed to provide mental health services as required by state law, which mandates that patients with urgent problems receive an appointment within 48 hours; those with non-urgent issues should be seen within 10 business days (or 15 business days if the appointment is with a specialist physician, such as a psychiatrist).

In a review of nearly 300 patient records, the agency found that 22 percent of cases in Kaiser’s northern region failed to meet the state’s requirements, along with nine percent in the southern region. Among the randomly selected files was a patient with suicidal ideation who waited 16 days for an appointment, and a therapist for another individual who wrote in their notes, “patient wants regular ongoing treatment so may look outside Kaiser.”

The goal of providing “regular ongoing treatment” for Kaiser patients by hiring new therapists is one of the principal demands of mental health care professionals like Fitzpatrick, who has joined 4,000 of his colleagues this week in a five-day strike. The strike, organized by the National Union of Healthcare Workers, is impacting more than 100 Kaiser clinics and medical facilities, and comes amidst contract negotiations that began in June but have stalled. During those negotiations, the union has proposed that Kaiser increase staffing with the goal of eventually seeing returning patients within two weeks, as opposed to over stretches of time that now routinely exceed one month.

Kaiser Permanente disputes the claims that it hasn’t made significant strides in providing timely access to mental health care. “We have been hiring therapists, increasing our staff by 30 percent since 2015 – that’s more than 500 new therapists in California – even though there’s a national shortage,” said John Nelson, the vice president of communications for Kaiser Permanente, in a prepared remark. Nelson also challenged the union’s assertion that the strike had anything to do with patient care, stating that one of the union’s demands was to reduce the amount of time therapists spend seeing patients, which now averages 75 percent of their days.

For Clement Papazian, a licensed social worker at Kaiser for 30 years who works in Oakland, reducing the time spent seeing patients would dramatically improve the quality of care given to patients, by allowing therapists to check in on family members by phone, write up more thorough notes and create a work environment that didn’t feel like a “patient mill.” Papazian said that he has seen many dedicated therapists drop out due to the “relentless pressure to see more patients” — what he describes as “rapid access to no care.”

Papazian acknowledges that Kaiser has hired new therapists, but argues that those new hires haven’t impacted the workload, due to Kaiser’s rapid growth — its number of enrolled patients in California has increased by nearly 11 percent since 2015. He also argues that Kaiser is well positioned to staff-up its mental health department, as the company made $3.8 billion in profit last year. “Kaiser is a big player that can really shape the industry,” he said. “What we want is to deliver on the care that Kaiser members deserve.”

“Janitors can tell you down to the tenant – to the desk – who doesn’t care and just throws everything in the trash or contaminates the recycle bin.”

Janitors, who are often the unseen eyes and ears of the commercial office buildings they clean, are on the front lines of an innovative effort to turn their workplaces green.

Aida Cardenas, director of the Building Skills Partnership, a labor-management funded initiative, launched the Green Janitor Education Program in 2014 at a time when building owners were increasingly seeking Leadership in Energy and Environmental Design (LEED) certification for their properties. The widely-used LEED rating system lets owners put a green stamp of approval that indicates a building’s level of conformity to green operation and maintenance standards. “Janitors weren’t really part of that conversation,” even though the kinds of chemicals and equipment they used were important in determining whether a building received a certification, Cardenas said.

The program began in Los Angeles with a pilot of about 120 workers in seven buildings as a collaboration between the Service Employees International Union-United Service Workers West, the Building Owners and Management Association (BOMA) of Greater Los Angeles, the U.S. Green Building Council (which developed the LEED system) and the Building Skills Partnership. (Disclosure: Several SEIU locals are financial supporters of this website.) Since then, more than 1,000 janitors have graduated from the program and are working in 65 buildings across the state.

Casilda De Jesus now unplugs her TV, radio and other appliances when she’s not using them, knowing that as, “energy vampires,” they are still draining power.

Janitors participate in 30 hours of classroom training, which takes place during their shifts over a 15-week period. One focus of the training is the purpose of environmental sustainability efforts, which can sometimes make work harder for janitors who must contend with “thinner trash bags that rip” and cleaning chemicals that they may not view as effective, said Cardenas.

The program—the only one like it for janitors in the country—has helped align the janitorial staff with a building owner’s sustainability goals. For example, some janitors had resisted using green chemicals that did not tackle dirt as quickly as other products.

Casilda De Jesus, who graduated from the program in August, recalled co-workers sneaking Ajax to the worksite until they were discovered by supervisors. “Having a better understanding of green concepts” helps janitors buy into green practices, De Jesus said through an interpreter. The use of cleaning products that have a recognized environmental seal helps buildings receive points toward their LEED certification. De Jesus claims the switch to green cleaning detergents, made several years ago by her building, has alleviated her asthma symptoms.

Buildings that participated in the Green Janitors program used 5.6 percent less energy on average in 2016 than buildings that did not, one study found.

The janitors are “turning off the lights that people leave on,” according to Cardenas. “They’re sorting through bins to divert as much waste as they can. They’re reporting leaks and [they] understand the urgency because they’re conserving water.”

The training has contributed to energy savings, said a pro-bono study conducted by seedLA, an environmental consulting group. Buildings that participated in the Green Janitors program used 5.6 percent less energy on average in 2016 than buildings that did not, the study found. The authors attribute those savings to green building maintenance practices, as well as to physical changes to the building due to energy efficiency upgrades.

“Building a low carbon economy takes workers and an awful lot of those workers are blue collar workers. They are not just engineers and highly technical professionals,” points out Carol Zabin, director of the Green Economy Program, at the University of California, Berkeley Center for Labor Research and Education.

The Building Skills Partnership’s programs—which also include English as a Second Language and digital literacy classes – are paid for by a fund created through collective bargaining between the janitors’ union and janitorial firms that contract with building owners. Last year, the Green Janitors program received a $520,000 grant from a state training fund, administered by the California Workforce Development Board, intended for sectors of the economy that must undergo transformation to combat global warming.

De Jesus and other janitors have brought what they learned home about composting, energy and water conservation. De Jesus now unplugs her TV, radio and other appliances when she’s not using them, recognizing that as, “energy vampires,” they are still draining power. She urges her neighbors to report water leaks to their apartment manager.

De Jesus would like to see her office building’s tenants benefit from the kind of training the janitors received. “I think it’s really important that the tenants in the building go through this program, so that they are sharing the same practices,” De Jesus said.

“Janitors can tell you down to the tenant – to the desk – who doesn’t care and just throws everything in the trash or contaminates the recycle bin,” noted Cardenas.

Building managers do not typically authorize janitors to talk to office tenants about profligate energy use or subpar recycling habits. But last Earth Day, the Building Skills Partnership released a video – introduced by Mayor Eric Garcetti — that educated property managers and janitorial companies about the program. It includes janitors delivering gentle reminders about how to be better environmental stewards by using public transportation, bicycling and recycling.

Rising Realty Partners owns and manages the Garland Center, the West Seventh Street building where De Jesus works, as well as several other downtown L.A. buildings whose janitorial staff are participating in the Green Janitors program. The company opted into the program so as to invest in the staff that maintains its buildings while also contributing to “building wellness,” said Kayce Hawk, senior vice president of property services for the company. The janitors have only recently graduated from the program, but the reports from the building staff have all been positive, she added. “It’s empowering for them to get free continuing education that benefits them in their job and in their home life.”

Randy Shaw on Los Angeles’ Lost Housing Generation

When I began writing my new book on the pricing out of the working and middle class from urban America — Generation Priced Out: Who Gets to Live in the New Urban America — the first place I turned to after the Bay Area was Los Angeles. I grew up in Los Angeles. I try to closely follow its land-use politics but was shocked to see how even neighborhoods like Boyle Heights faced displacement and gentrification. I also learned that Venice, which I always thought of as a progressive bastion, was filled with homeowners opposed to affordable housing in their neighborhood. The deeper I looked, the more I found the reasons for Los Angeles’ worsening housing and homelessness crisis: The city was not effectively protecting tenants and its rent-controlled units, nor was it building enough new housing.

Generation Priced Out tells the stories of those on the front lines of the Los Angeles housing crisis. Mariachis facing eviction from Boyle Heights describe their struggle to stay in their homes, and I defend the “by all means necessary” tactics of tenant groups battling displacement. I describe the struggle by Venice Community Housing to build housing for the homeless on a parking lot, a plan vigorously resisted by homeowners. I discuss the enormous power of the city’s affluent homeowner groups, and how they aggressively stop the building of new apartments. I also assess how Mayor Eric Garcetti and other city officials have responded to the crisis and explain why they must do more.

Randy Shaw is director of San Francisco’s Tenderloin Housing Clinic and the editor of BeyondChron.org. His prior books include The Activist’s Handbook: Winning Social Change in the 21st Century and The Tenderloin: Sex, Crime and Resistance in the Heart of San Francisco.

Los Angeles’ Measure B Is a Moonshot Aimed at Creating a Public Bank

A ballot measure in support of creating a public bank in Los Angeles could serve as a referendum on an idea that has gained traction in cities and states across the country since the 2008 financial crisis.

“To have a resounding ‘Yes’ vote from Los Angeles, which is one of the most powerful opinion centers of the world, would be tremendously historic,” says Trinity Tran, co-founder of Public Bank LA, an advocate for Measure B, which would amend the city charter to allow the city to establish a municipal bank.

But Measure B is a baby step in what promises to be a lengthy process to set up a municipal bank whose stated purpose is to provide the nation’s second-largest city with a socially responsible and cost-effective alternative to Wall Street banks.

The movement for public banks draws inspiration from the success of a 99-year-old public bank in the red state of North Dakota and from Germany’s network of over 400 regional public banks (or Sparkassen), which advocates say provided significant funds for the development of that country’s renewable energy sector.

Since the Great Recession, over 20 U.S. states have introduced bills to establish state-owned banks or to study their economic feasibility. New Jersey Democratic Governor Phil Murphy, a former Goldman Sachs executive, successfully campaigned for his current job on the promise of creating a state-owned bank. And California’s gubernatorial frontrunner Gavin Newsom has made the formation of a state bank that would fund infrastructure, student loans and housing part of his platform as well.

Pot profits for deposit? (Photo: Pandora Young)

A lack of resources is one motivation for city and state leaders’ interest in public banking, said Deborah Figart, a distinguished professor of economics at Stockton University in New Jersey.

After the Great Recession, “we really became much more aware of unmet infrastructure needs,” said Figart, who conducted an economic impact study for the proposed New Jersey bank. The American Society of Civil Engineers gives the U.S. a D+ grade for the state of its roads, bridges and other infrastructure — “practically a failing grade,” she noted. Meanwhile, local governments devote a significant portion of their budgets to paying interest on bonds that go to Wall Street banks and finance companies at a time when interest rates are on the rise.

In Los Angeles, the push for the bank emerged from grassroots activists who demanded that the city divest from San Francisco-based Wells Fargo, whose aggressive sales practices resulted in more than three million deposit and credit card accounts being opened without customers’ knowledge.

“We knew that it wasn’t really divesting if we were going to move our money to another predatory extractive bank,” said Tran. “So we introduced public banking early on in the campaign as a permanent solution to housing the city’s public finances.”

Last year, the city paid $1.1 billion in interest to bondholders, which in turn funds “wars and pipelines and private prisons,” said Tran, who would rather see tax money put to work to address city needs like housing and clean energy. Her banking advocacy began four years ago when she started meeting with fellow activists in Koreatown coffee shops. As of October 20, “Yes on B” supporters had raised $10,128 for the measure, according to the Los Angeles City Ethics Commission. No committee has been formed to oppose the measure.

There are critics, however. Rob Nichols, president and CEO of the American Bankers Association, writing in The Hill, fears that the public bank proposal would suffer from a “scattered business focus” and fall under “undue political influence” that would result in risky loans that would damage the public purse.

“It’s easy to make the banks the bad guy,” said Stuart Waldman, president of the Valley Industry and Commerce Association. But “it’s not easy to run a bank,” and a municipal bank would require significant start-up capital. “This is public money, so if they lose public money, if they realize that it doesn’t work, that hurts every person in L.A.”

The Los Angeles Timeseditorialized that the measure was one of “the most ill-conceived, half-baked ballot measures in years” and urged a no vote, in part, because the measure does not articulate a vision or plan for the bank.

But if the proposal on the ballot lacks detail, it’s because city officials have not wanted to invest in a business plan and feasibility study while the city is still prohibited by its charter from operating a bank, City Council President Herb Wesson told a news conference in October.

Wesson assured reporters that there was “no way on God’s green earth” the city would move to create a municipal bank without a subsequent citywide vote on a more detailed plan, and the ballot argument in favor of the measure that goes to every city voter says as much. For now, voters are only being asked to remove a legal hurdle in the charter that prevents the city from establishing a municipal financial institution.

Proponents of public banking regularly point to the Bank of North Dakota as a model. The Progressive-era institution was created in 1919 out of frustration with a banking system that was putting the squeeze on farmers. The bank was initially greeted with suspicion by a national press corps anxious about a Bolshevik incursion into the finance sector. But the bank, now very much part of the state’s business establishment, has seen record profits for 14 consecutive years. Because it steered clear of the volatile derivatives market, the Bank of North Dakota avoided the upheaval many financial institutions suffered when the housing market tanked in 2008.

“It’s partly because you have civil servants in charge rather than folks whose paychecks depend on how much money the bank makes in a quarter,” Sam Munger, director of external affairs for the State Innovation Exchange, told The American Prospect.

Considered a “banker’s bank” with a $4.9 billion loan portfolio that supports agriculture, business, homeownership and higher education, the Bank of North Dakota does not compete with other financial institutions.

“It’s not a bank for regular household customers, for car loans, credit cards and mortgages,” said Figart. “It is a bank for accepting public deposits and lending mostly to the public sector or public-private partnerships.”

Wesson has talked about L.A.’s municipal bank as a place where the cannabis industry could park its cash since pot is illegal under federal law. Such a move could restrict the bank’s ability to make federal wire transfers, but the L.A. activists who back the initiative see other uses for the bank.

“For our organization, it was never about cannabis; it was always about neighborhood issues,” says Gisele Mata, housing organizer of Alliance for Californians for Community Empowerment, a community-based non-profit that has been part of the coalition advocating the bank.

Public Bank LA leaders envision Los Angeles’s municipal bank playing a similar role to that of the Bank of North Dakota, but focusing on the city’s priorities. “It would start as a banker’s bank for the city, refinancing city debt and trying to consolidate the investment away from Wall Street and harmful extractive industries,” co-legislative director David Jette told KPCC-FM in October.

Public Bank LA, he added, also envisions the municipal bank “partnering with local credit unions and community banks” to fund housing, small businesses, low-interest student loans, renewable energy projects and, eventually, credit for the underbanked. The bank could also fund infrastructure projects more cheaply than commercial banks by avoiding the interest and fees that go to commercial banks, according to advocates.

Many hurdles remain before an L.A. bank could become operational. State and federal laws do not currently provide a regulatory framework for the formation of public banks, according to an August report by the city’s Chief Legislative Analyst’s office. The city must come up with a source of collateral for the bank and an oversight structure, and receive approval from the California Department of Business Oversight.

But a modern public bank can be made from scratch. In April, the Federal Reserve approved a public bank for American Samoa in the South Pacific, after the Bank of Hawaii abandoned the geographically remote U.S. Territory.

The North Dakota and American Samoan banks may be rare cases for now, but Figart believes that “in the next five years, there will be” more public banks, and “in the next 10 years, there certainly will be more.”

Will Proposition 11 Mean Less Rest for Ambulance Crews?

Supporters describe Proposition 11 as necessary to ensure public safety, but EMT workers describe grueling 12-hour shifts in which crew members can often go eight hours without having a chance to stop for food.

California’s Proposition 11, which seeks to rewrite California’s Labor Code as it relates to rest and meal breaks for private-sector ambulance employees, might appear to be a strange ballot measure, even for a state that has seen its share of odd propositions. It has no opponent listed on the state’s official voter guide, and the only backer of the proposition, American Medical Response, is a company headquartered in Colorado, which has spent $22 million to secure the bill’s passage. Prop. 11 seems like it must have an interesting backstory, and it does.

That story begins with a California Supreme Court ruling in 2016, Augustus v. ABM Security, which found that private security guards were required to be given uninterrupted rest breaks by their employer. Guards for ABM had been instructed to keep their pagers on during breaks and to respond to calls for assistance, a practice that the court ruled was in violation of state labor law.

Like security guards, the state’s private sector emergency medical technicians (EMTs) and paramedics are on call during breaks — and they have filed lawsuits against private companies, including American Medical Response, over the practice. According to the California Legislative Analyst, those suits, after Augustus, are likely to be successful. The analyst’s report estimates that to be in compliance with Augustus and offer uninterrupted breaks to their employees, companies would need to hire about 25 percent more ambulance crews, at a potential cost of more than $100 million per year. Then there’s the class action lawsuit against AMR, which is the largest private ambulance company in California. Prop. 11 seeks to nullify the lawsuit.

Prop. 11 comes after last year’s failure of Assembly Bill 263, which sought a solution to emergency workforce staffing. The bill, which was supported by the union that represents emergency medical services (EMS) workers, and opposed by AMR, would have created a carve-out in the labor code for private ambulance companies, allowing them to require workers to be on call during breaks and respond to emergencies that demand the use of sirens and emergency lights. “We wanted to create a policy that protects workers’ rights, allows a little bit of [time] to get meals, but still protects public safety,” said Jason Brollini, the president-executive director of United EMS Workers, a local of the American Federation of State, County and Municipal Employees. (Disclosure: AFSCME is a financial supporter of this website.)

What the proposed bill wouldn’t have done was shield AMR from previously filed lawsuits now before the court. “We weren’t willing, through the stroke of the pen, to take away the ability of workers to seek redress in court,” Brollini said.

Supporters describe Proposition 11 as necessary to ensure public safety and provide lifesaving assistance. “If Prop. 11 does not pass, first responders will not be able to keep their radios on during breaks, putting patient care at risk,” said Marie Brichetto, a Yes on Prop. 11 spokesperson. “Prop. 11 would simply continue the longstanding practice of paying private EMTs and paramedics to be on-call during breaks — just like other first responders, including police and fire.”

Brollini disputed the notion that response times will increase if Prop. 11 fails, noting that such times are mandated by contracts between private companies and the counties they serve. “There is not a provider in the state that is going to turn their radios off,” he said. “What we do need is some kind of relief.”

Although his union didn’t file paperwork in time for its opposition to Prop. 11 to be included in the state’s voter guide, Brollini says his own opposition is grounded in his 25-year career as an EMT worker, most of it spent working in an AMR ambulance. He described grueling 12-hour shifts in which workers can often go eight hours without having a chance to stop for food. Unlike police or firefighters, he said, they frequently don’t have stations at which to recuperate, exacerbating an already heavy workload.

In 2015, a survey published in the Journal of Emergency Medical Service found that first responders are 10 times more likely to attempt suicide than the general public. And a joint report in 2017 by the University of California, Berkeley and UCLA’s Labor Center reported that one-third of California’s EMTs and paramedics are low-wage workers, defined as earning less than $13.63 an hour, or two-thirds of the state median.

“We want to see our companies profitable,” Brollini said, “but we don’t want it to be at the expense of the worker’s mental and physical health.”